People's opinions of a third income tax rate?

P

Protocol

Registered User
Messages
4,605
What would people think of a third income tax rate? Say three rates: 20-30-40?

The UK have 3 rates, the USA have 6 rates.

The advantages are:

(1) more progessivity in the tax system

(2) tax reliefs could be given at 30% to everybody, not at 20/41 to different groups

(3) you wouldn't suddenly jump from paying a reasonable 20% to a penal 41%. You would move up a bit to 30%, and if your income increased by a lot, then to 40%

(4) overtime, or extra work, would be more attractive to a lot of people
 
Moderator note: post removed - please keep rants in Letting Off Steam when you are able to post there.
 
ok i'l, post again - basically, this is a good idea - FG proposed a third rate of tax in 1999 but it was rejected - i think they wanted the rate at 33 per cent. i think it's a good idea as you are right - it would lower the marginal rate in a progressive taxation system - also it could be a brilliant alternative to individualisation - probably it would cost the same as individualisation - i remember my husband telling me that at the time in 1999 individualsiation was costed the same as the introduction of a third rate (can't remember figure) these days individualisation is costing much much more, but anyhow, its a good suggestion .. (are you going to delete this post as well now??)
 
One major disadvantage is complexity. Many people in this country are already financially illiterate.
 
i'm absolutely in favour of a third tax rate

am i allowed to say three cheers to FG and Labour for rowing back on tax individualisation (a little bit)


Three cheers for the rights of a family to make their own decision - if FG and labour get elected

a third rate would be a super way of ending tax individualisation but also conceding that FF have a good point as regards lowering the marginal rate ..
 
Protocol said:
(4) overtime, or extra work, would be more attractive to a lot of people
Click to expand...

This was the precise reason why the middle rate was abolished in the early/mid 1990s. People whose earnings are at or near a tax band threshold are disincentivised from earning more for fear of going into a higher tax band. The abolition of the middle rate was designed to prevent this happening at two different levels of income, and succeded in doing so. I doubt if anyone wants reintroduce the anomalies that were got rid of back then.
 
ubiquitous said:
This was the precise reason why the middle rate was abolished in the early/mid 1990s. People whose earnings are at or near a tax band threshold are disincentivised from earning more for fear of going into a higher tax band. The abolition of the middle rate was designed to prevent this happening at two different levels of income, and succeded in doing so. I doubt if anyone wants reintroduce the anomalies that were got rid of back then.
Click to expand...

are you sure? if i was earning 33,500 as a single person do you really think i'd worry about going into the higher rate if i was offered overtime worth 2k? Would I turn down the overtime, worth some net 1,300 Euro in order to avoid the higher rate? Of course not!
 
How about a single taxrate for everything? Set it at we'll say, 20%. Then we could remove all tax loop-holes, and everyone would be happy!!
 
shnaek said:
How about a single taxrate for everything? Set it at we'll say, 20%. Then we could remove all tax loop-holes, and everyone would be happy!!
Click to expand...


don't you think the rich would get richer and the poor poorer? how would they fund public services?
 
Aisling2323 said:
don't you think the rich would get richer and the poor poorer? how would they fund public services?
Click to expand...

Some argue that a flat rate is unfair. It was the norm before WW1. Either way you can look at the arguments here:

http://en.wikipedia.org/wiki/Flat_tax

and decide for yourself.

It will be interesting to see if Germany adopts this system, as there is debate on it there at present. Many Eastern European countries have adopted the system, but it is too early yet to say whether it has been 'successful' or not.
 
I read your link and would agree with Gordon Brown where he says:

'The millionaire to pay exactly the same tax rate as the young nurse, the home help, the worker on the minimum wage"

It would make the rich richer - which makes me wonder - why haven't the PD's put this forward??
 
anyhow, as regards the third tax rate - that would be fair, it would be progressive, it would allow for a much fairer family tax system in this country. it would not trap spouses in the workforce or trap them in the home.

Another possibility is to introduce the French system. In France the tax credits are multiplied by the number of dependants. A spouse is worth 1.0 and each child is valued at 0.5. A 'base credit' or something like that is applied to all singles with no dependants. You multiply that base credit by the number of dependants ..

what ya think? fairer than Ireland anyway ..
 
Aisling2323 said:
anyhow, as regards the third tax rate - that would be fair, it would be progressive, it would allow for a much fairer family tax system in this country. it would not trap spouses in the workforce or trap them in the home.
Click to expand...
Problem is that the history has shown us that a third tax rate is not exactly fair and it does indeed trap spouses in the home (or at least disincentivise them from working or earning more at certain levels of family & personal income). I don't know if you were in the workforce in the first half of the 1990s but if you were I'm not sure you would be that anxious to return to the old way of doing things.
 
To be financially neutral...
the following would need to take place.
some people who currently pay 20 percent would have to pay 30 or 33%
some people who pay 41% percent would get to pay some tax at 30 or 33% instead of 41%.
I don't think society would gain by this.
your asking the first group to basically pay a little more tax while
the last group pay a little less.
Tax should be simple and everyone should know where they stand in
relation to it. I think our 2 rate system is simple and fair enough.
 
You must log in or register to reply here.
Back
Top